Petronet LNG reports steady net profit despite healthy net sales

The company has reported healthy 33% increase in net sales yet its net profit remained stagnant due to poor operating profit

Petronet LNG, a leading provider of liquefied natural gas (LNG), has witnessed a disappointing quarter. Net sales increased only 33% year-on-year (y-o-y) for the quarter ended 31 March 2013 to Rs8465.63 crore, , from Rs6375.43 crore in the previous corresponding period. Yet despite healthy net sales growth, its net profit remained stagnant, at Rs245.14 crore for the quarter ended 31 March 2013 when compared to Rs245.12 crore for the year-ago period. The management of Petronet LNG, according to SBI Cap Securities, has guided re-gasification charges at Kochi at RsRs62/mmbtu against earlier guidance of Rs50/mmbtu, higher than expected.

We had recommended Petronet LNG as part of our long-term portfolio (refer to Long Term section of our Moneylife magazine). The stock is currently quoting at Rs139.15 on the Bombay Stock Exchange (BSE).

A Moneylife analysis reveals that while net sales growth has been impressive due to sustained demand from LNG all over the country, the company has been struggling on the operations front. While the average three-quarter y-o-y net sales growth rate is a healthy 35%, the same three-quarter average y-o-y growth rate of its operating profit has been anemic and actually degrew 1%. This is a cause for concern in an otherwise highly regulated market. The company’s return on networth stood at an impressive 33% but its return on capital employed is far less impressive at 18%. The company’s market capitalization is valuing at 6.65 times operating profit.

In a note to clients, SBI Cap Securities believes that the company is valued Rs160 and has recommended a “Buy”. The report states: “Kochi import terminal is mechanically complete and expected to be commissioned by July 2013 (earlier guidance was of April). However, the initial volume will remain depressed with almost 10% capacity utilisation due to lack of pipeline connectivity to consumers. Management indicated that volume would pick up once Kochi-Bangalore-Mangalore pipeline is commissioned. Work is in progress in Kerala and Karnataka while 310km of the pipeline passing through Tamil Nadu is yet to receive state government clearance.”

Their new jetty, estimated to be over Rs1000 crore, at Dahej terminal is already under construction and is expected to be complete by the first quarter of 2014. It is expected to increase capacity by 5 million tonnes of LNG.

Also, during the quarter, Petronet LNG has had executed a preliminary conditional agreement with United LNG (a US-based firm) for supply of around 4 MMTPA of LNG for supply for 20 years through the Main Pass Energy Hub, which is been jointly developed by United LNG and Freeport McMoRan Energy. The binding LNG SPA is yet to be executed and is expected by the end of this year.

Its board of directors has recommended dividend of Rs2.50 per share for the year ended 31 March 2013.




3 years ago

Despite good results and also being darling of investment recommendations, Petronet LNG have not flown high as expected , but appear to gather strength for some future move.Risk -reward is in favor towards long as share appears to have bottomed out.

Other share worth mentioning is GMR Infra , it gave a real jolt when it went down last couple of days typical of shares of high beta above 2.0 , However good news flow and the market crossing 6000 mark and closing a shade lower today pushed this share exponentially far higher than what it lost yesterday. This shows strength , with the RBI announcement tomorrow this being a high beta and also rate sensitive and have been taken a beating last several quarters, should watch if can cross the previous 52 week high in the current session itself , if market remains above 6000 level it will be a maximum of 4-5 trading days for this high beta to record next 52 week high. However strict stop loss is a must for this share.

Sensex, Nifty may be on to a strong rally: Tuesday Closing Report

The first sign of reversal on the Nifty will be a close below any previous day's low 

Gains in the FMCG sector, supported by strong earnings by Hindustan Unilever on Monday, helped the market close in the green for the second day, despite adverse political developments in Delhi earlier in the day. The first sign of reversal on the Nifty will be a close below any previous day's low. The National Stock Exchange (NSE) registered a turnover of 64.03 crore shares and advance-decline ratio of 605:699.
Indian stock markets will remain closed on Wednesday for May Day.
The market opened on a strong note on continuation of gains in fast moving consumer goods leader Hindustan Unilever, which said its parent Unilever Plc would hike its stake in its Indian arm through an open offer. The news also supported gains in other companies in the sector like ITC, Marico and Godrej Consumer Products. Meanwhile, markets in Asia were firm in morning trade tracking better-than-expected housing data from the US.
The Nifty opened 29 point up at 5,933 and the Sensex resumed trade at 19,493, a gain of 105 points over its previous close. Gains in the FMCG sector catapulted the benchmarks to their intraday highs in early trade itself, The Nifty rose to 5,962 and the Sensex climbed to 19,623.
According to a release by HUL, “Unilever PLC along with Unilever NV is making a voluntary open offer to acquire 487 million equity shares representing 22.52% of the total voting share capital from the public shareholders of Hindustan Unilever at a price of Rs600 per share.” HSBC Securities and Capital Markets (India), has been mandated as the manager of the open offer.
The market could not hold on to its gains, as political developments at the Centre following the Supreme Court displeasure about the CBI’s handling of the coal scam report saw the market benchmarks paring their gains.
The indices slipped into the red in late morning trade as the fate of the ruling hung in balance after the opposition staged a walk-out from the Lok Sabha on the coal scam issue, jeopardising the passage of the Railway Budget and Union Budget.
The market fell to its lows in noon trade on selling pressure from realty, oil & gas, capital goods and PSU stocks. At the lows the Nifty touched 5,868 and the Sensex went back to 19,317.
Select buying in FMCG, metal and healthcare sectors helped the market edge higher in late grade and settle in the positive for the second day in a row. The Nifty closed 26 points (0.44%) higher at 5,930 and the Sensex ended at 19,504, a rise of 117 points (0.60%).
While the market barometers managed to close in the green on a late rally, the broader indices settled mixed, as the BSE Mid-cap index gained 0.42% and the BSE Small-cap index fell 0.31%.
The top sectoral gainers were BSE Fast Moving Consumer Goods (up 4.65%); BSE Metal (up 0.96%); BSE Healthcare (up 0.85%); BSE TECk (up 0.74%) and BSE IT (up 0.65%). The main losers were BSE Realty (down 1.07%); BSE Capital Goods (down 0.47%); BSE Consumer Durables (down 0.44%); BSE Bankex (down 0.33%) and BSE Oil & Gas (down 0.32%).
Eighteen of the 30 stocks on the Sensex closed in the positive. The chief gainers were Hindustan Unilever (up 17.28%); Sterlite Industries (up 4.03%); Mahindra & Mahindra (up 2.24%); Wipro (up 1.75%) and Coal India (up 1.64%). HDFC (down 1.94%); HDFC Bank (down 1.71%); Hindalco industries (down 1.57%); Larsen & Toubro (down 1.10%) and Bajaj Auto (down 0.80%) were the chief losers.
The top two A Group gainers on the BSE were—HUL (up 17.28%) and United Spirits (up 6.48%).
The top two A Group losers on the BSE were—Essar Oil (down 9.96%) and Financial Technologies India (down 3.95%).
The top two B Group gainers on the BSE were—Dr Agarwal’s Eye Hospital (up 0%) and Alka India (up 20%).
The top two B Group losers on the BSE were—Austin Engineering Company (down 19.93%) and Micro Technologies India (down .91%).
Of the 50 stocks on the Nifty, 24 ended in the green. The key gainers were HUL (up 17.17%); Sesa Goa (up 3.09%); HCL Technologies (up 2.74%); M&M (up 2.65%) and NMDC (up 2.27%). The main losers were Jaiprakash Associates (down 2.60%); IDFC (down 2.45%); IndusInd Bank (down 2.24%); Punjab National Bank (down 1.96%) and HDFC (down 1.94%).
Markets across Asia, with the exception of the Japanese benchmark, closed higher on the back of positive economic indicators from the US overnight. Expectations of continuation of stimulus measures also boosted investor sentiment.
The Hang Seng advanced 0.64%; the Jakarta Composite climbed 0.69%; the KLSE Composite gained 0.57%; the Straits Times rose 0.19%, the Seoul Composite surged 1.20% and the Taiwan Weighted settled 0.80% higher. Bucking the trend, the Nikkei 225 lost 0.17%. The Shanghai Composite remained closed for a local holiday.
At the time of writing, the key European indices were mixed and the US stock futures were marginally in the red ahead of the release of the consumer confidence data.
Back home, foreign institutional investors  were net buyers of shares totalling Rs620.38 crore on Monday whereas domestic institutional investors were net sellers of equities amounting to Rs366.20 crore.
Pharma major Aurobindo Pharma today said the company has received final approval from the US health regulator to manufacture and market Quinapril tablets in the American market. The company has received the approval to manufacture the drug, which is indicated for the treatment of hypertension and falls under the cardiovascular (CVS) therapeutic category, in strengths of 5mg, 10mg, 20mg and 40mg, it said in a release. The stock declined 1.07% to close at Rs190 on the NSE.
Noida-based Nucleus Software Exports is eyeing for two acquisitions over the next one year to strengthen its offering for the banking and financial services. The mid-size IT company said it is looking at acquiring companies with intellectual property in the financial services area, which will enable Nucleus to deal with loan origination and loan servicing applications. The stock settled 1.06% down at Rs74.70 on the NSE.
FMCG company Ruchi Soya Industries today signed an agreement with Japan’s Kagome and Mitsui to set up a joint venture (JV), RuchiKagome, to manufacture tomato products in India. Ruchi Soya will have 40% stake in the JV and the rest will be held by a special purpose company (SPC) created by Kagome and Mitsui. Kagome and Mitsui own 66.7% and 33.3% stakes respectively in the SPC. Ruchi Soya declined 1.01% to close at Rs68.80 on the NSE.


Indian market trends

The Sensex advanced 6% and the Nifty 7%, during the fortnight. ML Mega-cap Index and ML...

Premium Content
Monthly Digital Access


Already A Subscriber?
Yearly Digital+Print Access


Moneylife Magazine Subscriber or MSSN member?

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)